US:
- The Fed left interest rates unchanged as expected at the last meeting.
- The macroeconomic projections were revised higher, and the Dot Plot showed that the FOMC still expects another rate hike by the end of the year with less rate cuts projected in 2024.
- Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully.
- The US CPI last week beat expectations on the headline figures, but the core measures came in line with forecasts and the market’s pricing barely changed.
- The labour market remains fairly solid as seen once again last week with the beat in Jobless Claims, although continuing claims surprisingly missed.
- The US PMIs recently showed that the US economy remains pretty resilient.
- The University of Michigan Consumer Sentiment report last Friday missed across the board with the inflation expectations figures spiking back up.
- The US Retail Sales yesterday beat expectations by a big margin with positive revisions to the prior figures.
- The Fed members continue to cite elevated long-term yields as a reason to proceed carefully and will likely pause in November as well.
- The market doesn’t expect the Fed to hike anymore.
Switzerland:
- The SNB kept interest rates steady at 1.75% vs. 2.00% expected as the central bank sees the significant tightening in recent quarters countering the remaining inflationary pressures.
- The latest Switzerland CPI showed again that the inflation rate is comfortably in the SNB’s 0-2% target band for both the headline and core measures.
- The Unemployment Rate matched the previous reading hovering at cycle lows.
- The Manufacturing PMI saw a notable bounce back although it remains in contraction, while the Services PMI remain in expansion.
- The market expects the SNB to keep rates steady at the next meeting as well.
USDCHF Technical Analysis – Daily Timeframe
On the daily chart, we can see that the USDCHF pair recently bounced on the key support around the 0.90 handle where we had the confluence with the trendline and the 50% Fibonacci retracement level. The bounce was short-lived though and the price started to fall from the red 21 moving average back towards the support zone. This might be an ominous sign for the buyers, especially since the USD couldn’t rally on the back of very strong retail sales data.
USDCHF Technical Analysis – 4-hour Timeframe
On the 4-hour chart, we can see more closely the price action around the key support zone with the pair printing lower highs into the level. The selling pressure is pretty evident, and it could turn out to be a descending triangle pattern with a break of the support leading to a selloff into the 0.89 handle. The buyers will need the price to rise back above the trendline to leave behind a fakeout and get more conviction to target new higher highs.
USDCHF Technical Analysis – 1-hour Timeframe
On the 1-hour chart, we can see that the buyers are likely to step in around the current levels with a defined risk below the support to position for a rally back to the highs. Alternatively, more conservative buyers may want to wait for the price to take out the last swing high around the 0.9042 level first before joining the rally. The sellers, on the other hand, should pile in on the break of the support zone with a defined risk above it to position for a drop into the 0.89 handle.
Upcoming Events
Tomorrow we will get the latest US Jobless Claims report and the market will want to see if the miss in Continuing Claims last week was just a blip or the start of a trend. Later in the day we will also hear from Fed Chair Powell where the market will be focused on any hint about the near-term policy outlook.
